TSL records US$13m net earnings

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A total of 42,5 kg of tobacco valued at US$246,3 million has so far been exported since the commencement of this year’s tobacco season

TOBACCO Sales Ltd (TSL) reported net earnings of US$13 million in the full-year to October 31 (FY 2018), buoyed by a solid performance in all its business units.

Melody Chikono

The group’s revenues jumped 19% to US$52 million from US$43 million in FY 2017. But the growth was below annualised inflation of 42% to December.

Earnings per share rose marginally from 3,4 cents to 1,2 cents.

The group will in FY 2019 leverage on existing local and regional opportunities to generate foreign currency and maximise on balance sheet value preservation.

While growth will be largely organic, the group is also seeking acquisitive opportunities that will complement its defined strategy.

In its FY 2018 results, the group’s operating profit went up 30% while profit before tax was 20% above prior year at US$7,6 million as major capital projects that were deferred in H2 2018 will be undertaken in FY 2019. The agricultural cluster performed strongly and the tobacco-related business benefited from growth in national tobacco volumes.

The company’s FY 2018 numbers show that the logistics cluster also performed well and there was significant growth in general cargo and tobacco handled.

The ports and distribution divisions continued to be affected by low level of imports while the related estate clusters performance was coupled with minimal voids.

During the period, the group disposed of its entire shareholding in Nampak Zimbabwe Ltd, which had been available for sale since October 2014.

TSL said the group’s financial position remained sound with net asset value per share having increased 5% to 24,3 cents and current ratio improving from 1,4 to 1,8 buoyed by funds from the disposal of its investments in Nampak.

“Cash generation remains healthy and efforts will be concentrated on improving this. Gearing has been marginally reduced to 13% from 14% as the group continues to carefully control its financial commitments. The financial commitments, the preservation of value of the balance sheet and generation of foreign currency are key priorities to the group,” noted TSL.

Going forward, substantial investment in re-engineering and upgrading business processes and facilities for tobacco-related services are seen, with emphasis on growing market share. Management expects growth to be driven by a large national crop expected for 2019 although rainfall will be key.

Foreign currency for hessian stocking is crucial. The company is looking at other agro-packaging solutions.

The company will also in FY 2019 work on expanding the customer base and improving efficiencies in handling various commodities via its logistics services.

Increased investment in forklift capacity-handling of agro-commodities and bulk minerals will also be key.

The new warehouse management system software for operational efficiency being installed is expected to go live by April 2019.

Giving an update during an analyst briefing, TSL chief finance officer Derek Odoteye said the company will increase and upgrade its vehicle fleet to meet demands of the foreign traveller market segment.

“On real estate, major industrial property upgrades will also be undertaken and we will also look to partner with investors on more significant development projects. Our focus is on upgrading the technology platform and developing human capital,” he said.

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